The Propel Funeral Partners Ltd (ASX: PFP) share price has risen sharply, it’s up 11% in early trade in response to releasing its annual result for the 12 months to 30 June 2018.
Total revenue increased by 76% to $80.9 million from $46.1 million a year before. Average revenue per funeral rose by 5.5% to $5,508 and funeral volumes rose by 67% to 10,111.
Pro-forma operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 75% to $21.5 million and pro-forma operating earnings before interest and tax (EBIT) increased by 75% to $18.4 million.
Pro-forma operating net profit after tax (NPAT) increased by a pleasing 128% to $12.5 million and pro-forma basic earnings per share (EPS) also increased by 128% to 12.7 cents. The initial dividend payout is a fully franked 6.4 cents per share, 10% higher than the forecast in the prospectus.
Morningstar analysts were expecting Propel to report EPS of 12.1 cents and a dividend of six cents per share, so clearly the operating result was better than expected.
However, the reported statutory result was a reported loss of $14.3 million as a result of a non-cash share-based payment expense as well as transaction costs relating to the IPO.
Propel had $28.3 million of cash on the balance sheet at the end of the financial year, with a $50 million facility arranged and undrawn.
Management believe the business is well positioned to generate sustainable long-term growth. In FY19 Propel will get the benefit of full-year contributions from its FY18 acquisitions as well as part-year contributions from new acquisitions like Newhaven Funerals.
I was pleased reading through this result from Propel. There were a lot of pleasing factors such as the sizeable increase of the average price per funeral. A better dividend than expected was also pleasing, although I hope management maintain a disciplined balance sheet and are careful with acquisitions in regards to the price paid.
I plan to slowly accumulate Propel shares at a decent price over the coming years.
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Motley Fool contributor Tristan Harrison owns shares of Propel Funeral Partners Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.